How do I interpret ETF performance charts - total market return and NAV?

ETF PFF (I'm not investing in it, just go with me because it is a good example) came up as a international ETF with expense ratio in the bottom 40% and 1 mnth performance in the top 20%.

Chart shows the price (right?) which started at $50, dropped to almost $40 at the end of 2007, and now sits at $45. Appears in the top performer list because it is a 9% return in the past 30 days.

When I add the S&P index for comparison it doesn't show the price anymore but a % trend (% difference from inception? Y axis on the chart?) Sure, PFF is at 0 on the Y axis, down 20% at the end of '07 and around -10% now. But the S&P trend doesn't make sense against that; it starts at 75%?? and dips above and below that line.

How do I interpret all that??

What is the difference between Total Market Return and NAV Return on a fund or ETF performance report?

How do I search for an ETF with the best performance over 3-5 years with low expense ratios?

The S&P line, like the PFF line, is cumulative return from the beginning of the time period. I'm not sure what specific graph you're looking at where you see 75%, but the reason it doesn't start at zero is because the beginning return is the percent change as of the first day's open from the previous day's close. If the S&P happened to open at the exact same price it had closed the previous day, the S&P line would begin at zero.

NAV return is just the percent change in the NAV of a fund or ETF. Total market return is the percent change in NAV plus any distributions that may have been received, such as dividends. If you try and calculate what you would have earned from owning a stock by just looking at the change in price, you would be understating return because you aren't accounting for dividends. A total return calculation accounts for that.

Sorry, can't help on the ETF search.

Wow, good questions. PFF is from Ishares. The fund was introduced in 3/2007. No way you can find out how it would have performed over a 3 year period, accurately. You would have to back-test all of the stocks in the fund to see how it would have performed. There are a few things you can do to help you in your research:

1. Go to the finance section of yahoo.com. It is terrific. It will give you most of the information you need on pff.

2. Go to the ishares website. It has a screener. it also has definitions for all of the terms you are questioning.

3. If you have a stock account with a broker ( Schwab for instance) there is a comprehensive ETF screener and you can set your parameters and it will spit out all of the similar ETF's, their costs and the NAV returns.

4. There are also some great resources on the internet. One of my favorites is exchangetradedfunds.com

Look carefully at the stocks included in this ETF. You will see a lot of bank stocks, Ford Motor Co., etc. Be sure that is the investment you want to make--those stocks have all been hammered, and are subject to further write downs for consumer debt, and/or economy dependent for continued growth. So, this may be the perfect time to get into them, or it may still be early.

Hope this helps. There is plenty of information available to you, for free, at the websites I've listed. Good luck! Also, Rydex, Powershares, all of the ETF companies have websites with screeners...There are over 600 ETF's currently, so you have plenty to look at! And, almost every stock brokerage has an education section on their website, making it easy to find definitions and explanations. Plus, if you haven't opened a stock account yet, you can call a broker and tell him/her of your interest and ask how best to educate yourself--anyone who wants your business will be happy to point you in the right direction.